Many miss ESOP relief

BENGALURU: Two important initiatives for new companies in the 2020 Union Budget: relaxation in taxes on employee stock options (ESOP) and exemption from income taxes for new companies, have been criticized. The fine print of the Budget reveals that they are only applicable to companies that qualify under Section 80-IAC, which may limit the benefit to only a few hundred new businesses formed after 2016. ESOP exemptions and tax exemptions only apply to approximately 200 new companies recognized by inter-ministerial board.

To give a boost to the startup ecosystem, I propose to ease the tax burden of employees by postponing the payment of taxes for five years or until they leave the company or when they sell their shares, whichever is earlier, said the finance minister said while presenting budget.

ESOPs are currently taxed when they become eligible for the assignment, which is a financial burden for employees, since they may not be able to sell them at the same time. Employees also pay taxes twice, at the time of exercise and at the time of sale (capital gains tax). Start-up pressure groups such as IndiaTech, IVCA and had asked the government to simplify this by taxing the ESOPs just at the time of liquidity or sale.

Sitharaman also softened the rules for the three-year tax exemption on profits for new businesses, bringing the turnover limit to Rs 100 Rs of Rs 25 Rs and the period during which 10 years can be exercised at from 7 years. But the small print of Budget indicates that only new 80-IAC companies can benefit from these measures. More than 27,000 new companies are registered in the department of industry promotion and internal trade (DPIIT).

Live plus La condición de que los empleados paguen impuestos cuando dejan una empresa y un límite de tiempo de cinco años también restringe el beneficio de la mudanza. Si las startups quieren atraer talento, es plus difícil obtenerlo de startups plus grandes (ya que los empleados tienen que pagar impuestos sobre los ESOP existentes si se van). En cierto modo, un impacto negativo para las startups plus jóvenes/más pequeñas , dijo Vivekananda Hallekare, fundador de la startup Bounce para compartir scooters. Su startup, valorada en $ 500 millones recientemente, no califica ya que se registró en 2014.

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The startups had also requested the parity of long-term capital gains (LTCG) for unlisted shares, since most companies are private, held by local funds with listed shares. While LTCG in listed shares is 10%, in unlisted shares it is 20%.

La FM también anunció varias otras nuevas medidas para las nuevas empresas, ya que dijo que el espíritu indio de emprendimiento que resistió varias tormentas a lo largo de los siglos nos inspira y motiva. Reconocemos la necesidad de apoyar y energizar aún plus este espíritu .

These include plans to create digital platforms both to make the record of intellectual property Easy Rights (IPR) and also an investment settlement cell, which will provide information, support and permits necessary for the business both at the state and central level. The government also plans to establish a seed fund to support companies in the idea stage.